The Equipment Leasing & Finance Foundation (http://www.leasefoundation.org/) releases the first quarterly update to its 2012 Equipment Leasing & Finance U.S. Economic Outlook. The report is focused on the $628 billion industry and forecasts equipment investment and capital spending in the United States, and evaluates the effects on various related and exogenous factors in play currently and into the foreseeable future. The Q2 Outlook forecasts healthy growth year over year, although the projected growth for 2012 has slowed to 7% from the previous outlook of 9%. This decline is due to a slight downgrade of growth prospects, including the expectation that high oil prices will be a significant drag, particularly during the first two quarters of the year.
Key findings include:
- Overall, investment continues to be a main driver of U.S. economic growth. In particular, investment in equipment and software has grown steadily for eight straight quarters. Expectations for 2012 are that growth will moderate slightly, but remain positive overall.
- Credit market conditions are improving slowly as demand for financing grows and supply constraints gradually ease. Conditions remain favorable for purchasing versus leasing, though the expiration of tax benefits may provide a marginal boost to leasing. Otherwise, interest rates are near record lows and are likely to remain low through 2012.
- A triple threat of headwinds continues to drag down growth — high oil prices, uncertainty surrounding the Eurozone debt crisis, and a slowdown in China and other emerging markets.
- Overall, the macro outlook for 2012 calls for a slow improvement, as high oil prices continue. Real U.S. gross domestic product (GDP) growth of 2.3% is forecast (down from 2.4% in December), and inflation is forecast to average 2.4% for the year.
- Looking to the second half of the year, notwithstanding an external shock, the U.S. is poised for faster growth driven by pent-up demand in the consumer and business sectors.